JBS to Save the Day in the XL Foods Beef Recall Plant ShutDown

Never say never will be the theme of this story. In a deal announced today, JBS (a Brazilian Packer) will take over the operation of the plant with the option to purchase the plant, the feedyard and the farm. A source informed us that XL Foods employees were told at 5 PM.

“This action is another positive step to relicensing the XL Lakeside beef plant in Brooks, Alberta. We welcome the assistance of JBS and their resources,” said Brian Nilsson, Co-CEO.

This announcement will really shock people based on the amount of un-utilized capacity JBS already has in the US. This deal is really the best case scenario for the Canadian cattle feeder and rancher based on the circumstances. Having only one packing plant in Western Canada would have left many ranchers and feeders lost in a complete Cargill monopoly.

In terms of CFIA, this announcement makes it much easier and palatable to re-issue the operation license and begin cattle slaughter at the Brooks packing plant. Being able to justify the re-issue with a change in management makes it more saleable to the general public whether that is fair or not.

One point of speculation on JBS operating the plant before purchasing is that it gets the plant up and running while the Federal Government goes through the process of evaluating 35% of the Canadian slaughter cattle capacity being sold to a Brazilian company out of Canadian hands.

One feedyard owner that has talked to a JBS buyer in Hyrum, Utah was informed that it could take up to a month before the plant is up and running at full operational capacity.

Under the deal, JBS has the exclusive option to buy the Lakeside plant, feedlot and farming operations in Brooks, plus packing facilities in Calgary, Omaha, Nebraska and Nampa, Idaho, for $100 million. Half the payment would be in cash and half in JBS shares.